Cash Flow Statement Template in Excel - Free Download

Cash Flow Statement Template in Excel - Free Download

Cash Flow Statement Template in Excel - Free Download
Cash Flow Statement Template in Excel - Free Download

Investopedia defined A cash flow statement is a financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company. The cash flow statement measures how well a company manages its cash position, meaning how well the company generates cash to pay its debt obligations and fund its operating expenses.

How to Use a Cash Flow Statement

The CFS allows investors to understand how a company's operations are running, where its money is coming from, and how money is being spent. The CFS is important since it helps investors determine whether a company is on a solid financial footing.

Creditors, on the other hand, can use the CFS to determine how much cash is available (referred to as liquidity) for the company to fund its operating expenses and pay its debts.

The Structure of the Cash Flow Statement

The main components of the cash flow statement are:
  • Cash from operating activities 
  • Cash from investing activities 
  • Cash from financing activities 
  • Disclosure of noncash activities is sometimes included when prepared under the generally accepted accounting principles (GAAP).

Preparation Methods for Cash Flow Statement

The direct method of preparing a cash flow statement results in a more easily understood report.[12] The indirect method is almost universally used, because FAS 95 requires a supplementary report similar to the indirect method if a company chooses to use the direct method.

1-direct method statement of cash flows:
The direct method for creating a cash flow statement reports major classes of gross cash receipts and payments. Under IAS 7, dividends received may be reported under operating activities or under investing activities. 

If taxes paid are directly linked to operating activities, they are reported under operating activities; if the taxes are directly linked to investing activities or financing activities, they are reported under investing or financing activities. 

Generally Accepted Accounting Principles (GAAP) vary from International Financial Reporting Standards in that under GAAP rules, dividends received from a company's investing activities is reported as an "operating activity," not an "investing activity."

Sample cash flow statement using the direct method
Sample cash flow statement using the direct method
Sample cash flow statement using the direct method

2-Indirect method statement of cash flows
The indirect method uses net-income as a starting point, makes adjustments for all transactions for non-cash items, then adjusts from all cash-based transactions. 

An increase in an asset account is subtracted from net income, and an increase in a liability account is added back to net income. This method converts accrual-basis net income (or loss) into cash flow by using a series of additions and deductions.

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